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Gold (XAUUSD) gains momentum, supported by concerns over political risks and expectations for monetary policy. The removal of Fed Governor Lisa Cook by President Trump has raised doubts about the central bank’s independence. At the same time, signals from Fed Chair Jerome Powell and other officials point to possible rate cuts ahead. These developments have weakened the Dollar and boosted safe-haven demand. The market is now focused on upcoming US economic data for further direction.

Gold Gains on Dovish Fed Tone and Dollar Weakness

Gold shows renewed strength, rising to a fresh near-term high. This surge follows political uncertainty and renewed expectations of interest rate cuts in the United States. The Federal Reserve's independence has come under renewed pressure after US President Donald Trump announced the removal of Fed Governor Lisa Cook. He accused her of making false mortgage statements. This political move has raised concerns among investors about the Fed’s credibility and policy direction.

At the Jackson Hole summit, Fed Chair Jerome Powell signaled the possibility of a rate cut in September. Though he recognized ongoing inflation pressures, he cautioned that the labor market is facing increasing risks. Powell’s comments reflected a possible move toward softer policy measures. Markets reacted quickly, driving up demand for safe-haven assets, such as gold. According to the CME FedWatch Tool, the probability of a rate cut next month has jumped to over 84%, up significantly from 61.9% a month ago.

Contributing to the softer policy outlook, Lorie Logan of the Dallas Fed noted that banks are likely to use the Fed’s repo facility soon. This could help address short-term funding pressures. These signals of potential easing have weakened the US Dollar and boosted gold's appeal. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. Looking ahead, investors will watch for key economic data, including Durable Goods Orders, the Richmond Fed Index, GDP, and the PCE Price Index. Strong economic data could boost the Dollar and limit gold’s upside, though current gains are driven by policy uncertainty and rate cut expectations.

Technical Analysis: Gold Cup and Channel Formation Points to $4,000 Breakout

The gold chart below shows a powerful long-term pattern, featuring two large “cup” formations that have emerged over the past three decades. Cup 1 developed between 1996 and 2005, followed by a strong rally within Ascending Channel 1. During this phase, gold prices surged from approximately $250 to over $1,900. This marked a significant bullish trend driven by long-term accumulation and investor confidence.

(Click on image to enlarge)

Gold entered another accumulation phase after the correction, forming Cup 2 from 2012 to 2019. This structure closely mirrored the earlier pattern, with another extended phase of consolidation before the next breakout. These recurring formations suggest a strong accumulation base, where long-term investors gradually build positions. Each breakout from the cup formations has historically led to strong bullish cycles, indicating the underlying trend's strength.

Currently, gold is moving within Ascending Channel 2, which began after the 2020 consolidation. The price has respected the channel’s boundaries, recently touching the upper edge near $3,385. The pattern of higher highs and higher lows confirms strong momentum. Similarities between past and present price behavior suggest the uptrend could target the $4,000–$4,200 range. The chart shows sustained strength, and volume confirms the bullish trend. Pullbacks within the channel continue to offer attractive buying opportunities.

Conclusion

Gold continues to benefit from political uncertainty and shifting policy signals. The removal of a Fed official and dovish remarks from central bank leaders have weakened the Dollar. These factors have increased demand for gold as a safe-haven asset. Technical patterns support the bullish outlook. The price remains in a strong uptrend with no signs of weakness. Gold stays resilient for now, but the next move may depend on US economic releases. 

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